Engaging independent contractors can offer flexibility and commercial efficiency for businesses and individuals alike. However, if a contractor is later found to be an employee, businesses can face significant liability for arrears, penalties, and personal grievance remedies.

New Zealand law looks beyond labels to the real nature of the relationship. A well-drafted contract alone is not enough. The heart of the issue will always depend on whether the true nature of the relationship is one of employment, or whether a person is genuinely in business on their own account having regard to the nature of the work they perform.